The halt in fertilizer shipments from the Arabian Gulf due to the war with Iran brought to mind the German chemist Justus von Liebig, one of the leading advocates of the mineral nutrition theory for plants in the 19th century. Liebig is widely known for promoting what is now called “Liebig’s Law of the Minimum.”

This law states that the scarcest essential nutrient is the one that limits plant growth. In other words, once farmers run short of one critical nutrient, adding more of the other nutrients cannot compensate for the missing element.

Liebig’s law now appears set to impose itself in a major and alarming way during the upcoming planting season, because the Arabian Gulf supplies 36% of the world’s urea — one of the main nitrogen fertilizers — along with 29% of anhydrous ammonia, another key nitrogen fertilizer, in addition to 26% of diammonium phosphate and 13% of monoammonium phosphate.

To revisit some high school biology basics, nitrogen, phosphorus, and potassium are the primary nutrients required by plants. These nutrients do not come from air or water and must instead be supplied through the soil. One exception is certain legumes such as soybeans, which are capable of fixing nitrogen from the atmosphere for internal use.

Adding these nutrients to the soil improves both crop quality and yields. But massive quantities of two of the three key nutrients are no longer flowing from the Arabian Gulf.

At the same time, around 20% of the world’s liquefied natural gas exports from the Gulf region have also been disrupted. In countries such as India, imported LNG is used as a feedstock for domestic nitrogen fertilizer production.

There may also be additional complications affecting fertilizer supplies that are not yet fully visible.

Rising prices pressure farmers worldwide

Higher fertilizer prices have already pushed wheat farmers in Argentina to consider reducing their use of urea fertilizer, meaning less nitrogen availability for crops.

The alternative would be shifting toward crops that require fewer fertilizers, which could ultimately reduce wheat output.

In Egypt, one farmer decided to abandon wheat cultivation — a fertilizer-intensive crop — in favor of other crops, while cutting his planted area to only half of its usual size because he could no longer afford fertilizers, seeds, and other agricultural chemicals, including herbicides and pesticides that are often derived from petroleum products.

A recent survey by the American Farm Bureau Federation also showed that 70% of US farmers cannot afford all of their fertilizer needs.

Liebig’s law goes beyond fertilizers

As is becoming increasingly clear, Liebig’s Law does not apply only to agricultural fertilizers.

Modern farming equipment depends almost entirely on diesel fuel. The sharp rise in diesel prices came after US farmers had already made planting decisions for the current season, meaning the immediate impact will likely appear in the form of weaker profits rather than lower production.

However, if diesel prices remain elevated, farmers may eventually reduce planted acreage or switch to lower-cost crops.

Diesel clearly needs to be viewed as an essential agricultural input, just like fertilizer itself.

The foundational materials of modern civilization

The analysis extends far beyond agriculture, as Liebig’s Law can also be applied to the critical inputs underpinning modern society as a whole.

Energy expert Vaclav Smil argues that the modern world depends on four core materials: cement, steel, plastics, and ammonia.

Ammonia, of course, is a key input for nitrogen fertilizer production, which has already been discussed. The other three materials are so deeply embedded in modern life that their importance often goes unnoticed.

Smil highlights an especially important point at a time when oil and natural gas supplies from the Arabian Gulf are being disrupted: production of all four materials relies heavily on fossil fuels.

Beyond these industries, the world now appears close to discovering that losing large amounts of oil and natural gas could constrain the production of a vast range of goods fundamentally dependent on these resources and their derivatives — exactly as Liebig’s Law would predict.

A real test for the global economy

The risk of such constraints on the global economy was always visible to those willing to see it, but the dominant assumption had long been that such limits would never truly emerge, or that if they did, they would only be temporary.

That assumption is now facing a real test.

And if oil analyst Art Berman is correct in his assessment that the world may never again return to the pre-war levels of oil production seen before the conflict with Iran, then the belief in unlimited supply will have to give way to a new reality — one defined by constrained production of many of the world’s most essential materials.

Today’s crypto market headlines are centered around a sharp price decline, with traders’ biggest concern focused on Bitcoin falling below the $77,000 level.

The decline came amid strong pressure tied to inflation fears, rising US Treasury yields, geopolitical tensions, and a fresh wave of leveraged long liquidations that wiped out hundreds of millions of dollars from the market within hours.

Bitcoin falls on weak trading volumes

Bitcoin dropped by more than 4% during Monday trading and briefly touched the $76,000 area before staging a slight recovery.

Many traders noted that the decline occurred on relatively weak trading volumes compared with previous selloffs.

Crypto market observers pointed out that the sharp drop happened despite below-average selling activity, fueling speculation that large investors, or so-called “whales,” were driving the market lower while retail traders rushed to sell in panic.

According to several traders, whales gradually pushed prices down, triggering liquidation levels tied to leveraged long positions.

As those positions were liquidated, selling pressure intensified as smaller investors attempted to protect their capital.

Data from CoinGlass showed that more than $670 million in crypto positions were liquidated over the past 24 hours. Long traders accounted for around 95% of total losses.

Broad losses across the crypto market

The broader crypto market also came under heavy pressure, with Ethereum falling by around 6% toward the $2,100 level, while Solana, XRP, BNB, and Dogecoin posted losses ranging between 5% and 12%.

The total crypto market capitalization declined by around 3.8% to approximately $2.56 trillion, reflecting weaker risk appetite toward digital assets.

BlackRock-related selling adds pressure

One of the major factors adding to market pressure was outflows linked to BlackRock’s Bitcoin and Ethereum funds on May 15.

According to data shared by crypto market watcher Crypto Patel, BlackRock clients sold around 1,722 Bitcoin worth roughly $136 million.

Ethereum sales also exceeded 22,600 ETH worth nearly $50 million.

Despite the recent selling activity, BlackRock still holds more than 817,000 Bitcoin valued at around $63 billion through its Bitcoin investment products.

The company also owns more than 3.3 million Ethereum worth approximately $7.2 billion through its Ethereum-related funds.

Still, crypto traders viewed these outflows as another sign of caution among institutional investors at a time when market sentiment is already weak.

Inflation and bond yields pressure the market

Outside the crypto market, investors are also reacting to recent US inflation data.

The US Producer Price Index (PPI) rose by 6% year-on-year after Consumer Price Index (CPI) data also came in above expectations.

This reduced hopes for an early Federal Reserve rate cut, while many traders now expect interest rates to remain higher for longer.

Meanwhile, the yield on the US 10-year Treasury note climbed from around 4.5% to 4.6%, making safer assets more attractive compared with high-risk assets such as cryptocurrencies.

Higher yields typically pull liquidity away from Bitcoin and altcoins as investors shift toward bonds and lower-risk investments.

Can Bitcoin and altcoins recover?

Despite the sharp decline, some crypto supporters still believe the market may stabilize once liquidation pressure fades.

Bitcoin managed to recover slightly after breaking key support levels and is currently trading near $76,904.8, suggesting buyers remain active around lower price levels.

Market participants are now watching whether Bitcoin can reclaim the $77,000 to $78,000 zone in the short term.

Some analysts also believe the recent decline may have helped flush excessive leverage out of the market, which could reduce volatility in the coming days.

At the same time, altcoins remain under pressure, although many traders expect them to move alongside Bitcoin if the market’s largest cryptocurrency manages to find support and improve overall sentiment.

For now, inflation data, Treasury yields, and institutional investment flows remain the main drivers of prices. Until those pressures ease, traders expect the market to remain highly sensitive to sudden moves and liquidation events.

Oil prices declined on Tuesday, with global benchmark Brent crude falling by 1.5% after US President Donald Trump announced the suspension of a planned attack on Iran to allow room for negotiations aimed at ending the war in the Middle East.

Trump posted on social media on Monday that he had decided to delay a military strike on Iran that had been scheduled for Tuesday, while efforts to reach an agreement continue, adding that the United States remains ready to resume attacks if no deal is reached.

Brent crude futures for July delivery fell by $1.73, or 1.5%, to $110.37 per barrel by 08:25 GMT, while US West Texas Intermediate crude for June delivery — which expires on Tuesday — dropped by 63 cents, or 0.60%, to $108.03 per barrel. The more active July contract also declined by 82 cents, or 0.8%, to $103.56 per barrel.

Ole Hansen of Saxo Bank said:

“We continue to move from one news cycle to another, with a lot of noise, but so far there are no real developments pointing to the beginning of the end of the war.”

He added that Trump’s remarks were the primary reason behind the decline in oil prices.

Brent and WTI had reached their highest levels since May 5 and April 30 respectively during the previous session.

The Strait of Hormuz Continues to Pressure Markets

The conflict in the Middle East has effectively shut down the Strait of Hormuz, a critical waterway through which around one-fifth of global oil and liquefied natural gas supplies normally pass, causing the largest disruption to oil supplies in the world, according to the International Energy Agency.

Iranian state media reported on Tuesday that Tehran’s latest peace proposal to the United States includes ending hostilities on all fronts, including Lebanon, the withdrawal of US forces from areas near Iran, and compensation for war-related destruction.

In a separate development, US Treasury Secretary Scott Bessent extended a sanctions waiver for 30 days to allow “energy-vulnerable” countries to continue purchasing seaborne Russian oil.

US Inventories Decline

In the United States, Energy Department data showed a draw of 9.9 million barrels from the Strategic Petroleum Reserve last week, a record level, reducing inventories to around 374 million barrels, the lowest level since July 2024.

US crude oil inventories are expected to decline by around 3.4 million barrels in the week ending May 15, according to data from the US Energy Information Administration scheduled for release on Wednesday.

The US dollar rose on Tuesday as investors balanced cautious hopes for a Middle East peace agreement against concerns that the Federal Reserve may raise interest rates to contain inflation driven by higher energy prices.

US President Donald Trump said on Monday that there is now a “very good chance” of reaching an agreement to limit Iran’s nuclear program.

The dollar had surged in March after Iran’s effective closure of the Strait of Hormuz pushed oil prices sharply higher, hurting oil-dependent economies such as Japan and the eurozone while boosting demand for the US currency as a safe haven.

However, oil prices fell by 2% on Tuesday following Trump’s remarks.

Paul Mackel, Global Head of FX Research at HSBC, said: “There are reasons why the dollar has not returned to the levels seen in March.”

He added: “The main reasons are that global risk appetite has recovered strongly, stress in US dollar overnight indexed swap (OIS) markets has not reached levels consistent with pricing a strong Fed tightening cycle, and monthly global growth momentum remains positive.”

At the same time, investors are now pricing in a roughly 48.5% probability of a Federal Reserve rate hike in December, alongside a 98.8% probability of rates remaining unchanged at the next June meeting, according to the CME FedWatch Tool.

Thierry Wizman, Global FX and Rates Strategist at Macquarie Group, said: “Even if the Federal Reserve moves to signal a neutral stance in June, that may not be enough to stabilize inflation expectations and long-term US Treasury yields.”

He added: “There will be an opportunity for the Fed to shift its rhetoric more clearly toward monetary tightening through the upcoming series of speeches by central bank officials between now and June 6.”

Major Currency Performance

The US dollar index, which measures the currency against a basket of six major currencies, rose by 0.2% to 99.18 points after ending a five-day winning streak on Monday as fears of escalating war eased.

The euro fell by 0.2% to $1.1633.

Japanese Yen Nears Intervention Zone

Against the Japanese yen, the US dollar rose by 0.15% to 159.10 yen after government data on Tuesday showed Japan’s economy expanded at an annualized pace of 2.1% in the first quarter, strengthening expectations for a Bank of Japan rate hike in June.

Japanese Finance Minister Satsuki Katayama told reporters on Monday that Japan is prepared to act against excessive foreign exchange volatility, stressing that any intervention to support the yen and sell dollars would be conducted in a way that does not push US Treasury yields higher.

Investors are watching closely for further signs of intervention to support the yen, which remains slightly stronger than levels seen before Japanese authorities carried out their first direct market intervention in nearly two years last month.

Other Currencies

The Australian dollar fell by 0.5% to $0.71345 following the release of minutes from the Reserve Bank of Australia’s May 5 meeting.

The New Zealand dollar also declined by 0.4% to $0.5854, pressured by movements in the Australian currency.

Against the Chinese yuan, the US dollar rose by 0.1% to 6.8031 yuan in offshore trading.